i need the definition on gross profit margin but in laymans terms
2007-03-03 13:01:18 · 6 answers · asked by erinfiorello 1 in Social Science ➔ Economics
Gross profit is the total income derived from the sale of goods or services. If you sold 5 candy bars at $1 each your gross profit would be $5.00. However, if you subtract the amount it cost you to sell those candy bars, that is net profit--the money you get to keep and pay taxes on. The cost of doing business would include: how much did it cost you to buy those candy bars; did you have an employee who sold the articles whose wages you have to pay? Margin means what is the difference between what you paid for the candy bars and what you sold them for. If you bought the candy bar for $4.00 and sold it for $5.00 your margin would be a dollar. (Sorry, I'm terrible with percentages). The accounting principle is: Gross profit minus expenses equals net profit. Net profit is the important number. Of course it gets a lot more complicated than this, but the concept is accurate.
2007-03-03 13:25:37 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Define Profit Margin
2016-09-30 07:40:14 · answer #2 · answered by mcdougald 4 · 0⤊ 0⤋
Gross profit margin is a measurement of efficiency in production and distribution. Total revenue less cost of sales equals gross profit. Gross profit divided by total revenue equals gross profit margin. The higher the GPM the healthier the company.
Read more about it here:
http://beginnersinvest.about.com/cs/investinglessons/l/blgrossmargin.htm
2007-03-03 13:11:35 · answer #3 · answered by themainsail 5 · 0⤊ 0⤋
Elna, I hope you didn't really teach this stuff, since you do not know the difference between gross profit and sales.
"Sales minus the cost of the thing you just sold".
A simple example: suppose you are a retail store and you sell candy bars. You buy them wholesale for 60 cents, and sell them retail for $1.00. Your gross profit is Sales - Cost of Goods Sold, or $1.00 - .60 = .40.
Your gross profit is 40 cents and the gross profit margin in 40%.
2007-03-03 14:12:05 · answer #4 · answered by KevinStud99 6 · 0⤊ 0⤋
It is the percentage of income that is left over after the cost of raw materials and labor (but not sales and administrative costs) have been subtracted.
2007-03-03 13:08:28 · answer #5 · answered by sargon 3 · 0⤊ 0⤋
1
2017-02-09 02:46:36 · answer #6 · answered by ? 4 · 0⤊ 0⤋